Days payable outstanding (DPO) measures the average number of days from when a company purchases inventory and materials from the supplier until it’s paid. The DPO calculation is: DPO = Number of Days x = Average Accounts Payable Cost of Goods Sold The formula can easily be changed for periods other than one year or…
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What Is 3PL? A Guide to Third-party Logistics Services
A 3PL (or a third-party logistics provider) is an outsourced partner that handles logistics processes for other businesses. 3PLs are commonly used by ecommerce companies that still manage product- and order-related tasks but want to delegate inventory management, warehousing, and fulfillment (including shipping, distribution, returns, and exchanges). Partnering with a 3PL company allows merchants to…
What Is VoIP? A Complete Guide for Small Businesses
Voice-over-internet-protocol (VoIP) is a type of phone system that uses the internet (instead of conventional copper wires) to make and receive calls. Compared to landline phones, it’s cheaper to set up and maintain and offers more advanced telephony features, such as automatic call distribution (ACD), interactive voice response (IVR) system, call analytics, and third-party integrations….
What It Means to Materially Participate & the Passive Activity Loss Rules
The term “material participation” is used to describe your involvement in a business activity. Generally speaking, you materially participate in an activity if you’re involved in the operation of the activity on a regular, continuous, and substantial basis. If you meet these requirements, any losses from the activity are not limited by the passive activity…
What Is a Stay Interview? A Guide for Small Businesses
A stay interview—or retention interview—is a one-on-one discussion between an employer and an employee to determine what makes the employee stay in their job or with the company. Unlike exit interviews, which focus on departing employees, stay interviews seek information from current employees (generally high-performers but sometimes disengaged workers) on overall job satisfaction and engagement….
What Is Retail Accounting? Retail Method + Calculator
The retail method of accounting is an inventory estimation technique used to compute the value of ending inventory without having to take a physical count. Businesses with large volumes of inventory, like grocery stores, use the retail method because it’s quick and affordable to perform, unlike a physical count. Use the calculator below to compute…
Credit Check for Employment: Complete Guide
A credit check for employment is a type of pre-employment background screening that specifically looks at a candidate’s financial and credit history. Most companies don’t run credit checks on every new hire, typically reserving that for candidates applying for a position that deals with money. If and when you do run a pre-employment credit check,…
Segregation of Duties in Accounting for Small Businesses
Segregation of duties (SoD) in accounting is defined as developing a system where no person is performing tasks within more than one of three general functions. It’s an internal control mechanism that prevents fraud and error, and proper SoD ensures checks and balances within the business. When there is no SoD in place, opportunities to…